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Foreign Direct Investments Yield Net Inflows in the First Quarter of 2011

06.10.2011

Foreign direct investments (FDI) continued to post net inflows in March 2011 amounting to US$167 million, more than twice the US$69 million level recorded in the same month a year ago. All FDI components yielded positive balances during the month. In particular, net inflows of equity capital amounted to US$46 million, a reversal of the US$4 million net outflows reported in March 2010.  Other capital and reinvested earnings realized net inflows of US$96 million and US$25 million, respectively.

As a result, FDI net inflows for the first quarter of 2011 reached US$471 million. This was, however, lower by 16.6 percent than last year's level as investors remained cautious on account of the uncertainties brought about by the ongoing sovereign debt problems in Europe, the political unrest in the Middle East and North Africa region  as well as the disasters that struck Japan.

The bulk of FDI inflows for the three-month period was recorded in the other capital account, consisting mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines.  This account registered net inflows of US$277 million, lower than the level posted in the comparable period last year due to the decline in intercompany loan availments.

Reinvested earnings amounted to US$113 million in the first three months of 2011 as foreign investors opted to plough back corporate earnings to local enterprises given the Philippine economy's resilience amidst challenging global economic conditions.

Meanwhile, net inflows in equity capital rose by 80 percent to reach US$81 million in the first quarter of the year. Gross placements in equity capital summed up to US$121 million and were channeled to the real estate, manufacturing, and mining and quarrying sectors. Major investors during the period were from the U.S., Singapore, and Hong Kong.

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